AI semiconductor stocks plunged on credit concerns last week, while domestic-demand and defensive stocks remained firm. Non-AI stocks, including Toyota Motor and pharmaceutical and retail stocks, rose, while sharp gains continued in cybersecurity-related stocks.
The major stock indexes last week were caught in an “AI stocks-only bear market,” with selling in AI stocks having a broad impact and the Nikkei Average falling sharply for the week. By contrast, domestic-demand defensive stocks showed relative strength.
Factors driving the decline in AI stocks included sharp falls in domestic AI stocks such as Advantest, Tokyo Electron, and SoftBank Group. Credit concerns at CoreWeave also affected equities, spreading selling across related sectors. CoreWeave’s rising bond yields and sharp share-price decline are believed to have accelerated the broader decline in AI stocks.
Non-AI stocks, meanwhile, remained firm. Large-cap Toyota Motor rose 6.3%, while defensive stocks such as Astellas Pharma rose 7.6%. Small-cap event-driven stocks also stood out. Cluster Technology surged after announcing a capital and business alliance with Seiko Epson, while security-related stocks continued to post sharp gains.
Next week is expected to focus on upcoming earnings announcements from AI stocks and the resilience of domestic-demand and defensive stocks. Attention is also expected to center on security-related stocks and companies revising their earnings forecasts upward.